Annual Corporate Governance Report 2017

26 % other non-executive 16.67 Describe the functions assigned to the committee and its rules of procedure. Outline the committee’s key activities in the year. The Committee was created under article 39 of the Company’s articles, which also specifies the rules on the membership, functioning and powers and duties of the Committee, which are described in further detail in articles 20 and 21 of the Board Regulations. As with the remaining Board committees, where nothing is specifically prescribed for the Executive Committee, the rules of functioning of the Board apply to the extent they are compatible with its type and function. As a general rule, the Executive Committee meets on the same day as the Board of Directors, and on a preliminary basis, since its main activity consists of preparing the Board of Directors’ meetings. Except in exceptional emergency or essential circumstances, the Committee does not exercise the powers formally delegated on a permanent basis. Accordingly, it does not usually adopt any type of resolution. When it has occasionally done so, always on an extraordinary basis and for emergency and/or essential reasons, the resolution has subsequently been expressly ratified by a meeting of the full Board of Directors. A qualified majority of two thirds of directors is required to be appointed and dismissed as a member of the Executive Committee, under article 39 of the Company’s articles and article 20 of the Board Regulations. Such members are appointed by the Board of Directors from among the Company’s directors. The Committee must be formed by no fewer than three (3) and no more than nine (9) directors, pursuant to article 20 of the Board Regulations. The exact number of members integrating this Committee at each moment will be determined by the Board, considering its size, optimum operability and the maximum effectiveness of the Executive Committee and the number of members of the remaining Committees. Due to their position, Executive Committee members include the Chairman of the Board (who is also its Chairman, as stipulated in section 3 of article 20) and the CEO. On 14 December 2016, the independent director Patricia Estany Puig joined the Executive Committee. Since that date, she has occupied the post of Lead Director, to which she was appointed under article 15(3) of the Board Regulations and article 529 septies of the Spanish Companies Act, following the change of director class of the Chairman, who currently has the status of executive director (as well as being a proprietary director). The Committee Secretary is the Secretary to the Board, or, in his/her absence, the Deputy Secretary, who does not have voting rights, unless he/she is also a director and member of the Executive Committee. Pursuant to the Company’s articles and the Board Regulations, the Executive Committee must meet, subject to notice given by its Chairman, when so required in the interests of the Company, and, regularly, once a month, unless the Chairman does not consider it necessary. The Committee is validly constituted if a majority of members are present in person or by proxy. The Committee adopts its resolutions by a simple majority of members present in person or by proxy. Proxies may be given only to other members of the Executive Committee. In the case of a tie, the Chairman will have the casting vote. The main task of the Executive Committee performed in 2016 was the preparation of Board meetings. In January an additional meeting was held – no Board meeting being scheduled – at which the Committee focused on examining the key features of the performance and affairs of the Group and year-end forecasts. No specific resolution was passed. The 2017 Action Plan referred to earlier, which is part of the 2016 Board assessment report, sets out a proposal put forward by some directors regarding the Company’s corporate governance system, to the effect that a new internal functioning protocol should be introduced to enable the Executive Committee to intervene in especially important matters. To implement this proposal, the Board, supported by a favourable report produced by the Appointments and Remuneration Committee on the basis of earlier analysis and review, at its meeting of 22